Washington, D.C. – U.S. Representatives Darin LaHood (IL-18), Jimmy Panetta (CA-20), Ron Estes (KS-04), Brendan Boyle (PA-02), Andy Barr (KY-06), and Madeleine Dean (PA-04), reintroduced the bipartisan Public Service Retirement Fairness Act. The legislation will level the playing field and ensure public sector and non-profit retirement-savings programs have the same access to low-cost investments as private sector retirement plans do.
"I want to ensure that Illinois teachers, nonprofit employees, and public servants have access to low-cost investment retirement-savings plans," said Congressman LaHood. "Public servants should not be limited in their investment options, and our bipartisan bill will level the playing field public-service-oriented employees and provide greater financial security, as they work towards a well-earned retirement.”
Faculty and staff at K-12 public education institutions, nonprofit hospitals, charitable organizations, and other nonprofits have access to 403(b) defined-contribution retirement-savings plans to save money for the future. 403(b) plans are similar to 401(k) plans offered in the private sector, but they cannot invest in Collective Investment Trusts (CITs).
CITs are collectively managed investment vehicles that typically have lower fees and more flexibility than the types of annuity contracts and mutual funds that the 403(b) plans are limited to investing in. Due to compound interest, higher fees add up over time, costing teachers and other public service professionals thousands of dollars in retirement savings. There is no reason why 403(b) defined-contribution plans should not be permitted to invest in CITs. This legislation fixes this inequity by allowing 403(b) plans to offer these kinds of investments.
“Central Coast teachers and nonprofit employees tirelessly serve our community, but face a high cost of living that is further compounded by a lack of access to flexible retirement plans, hindering saving,” said Congressman Panetta. “My bipartisan Public Service Retirement Fairness Act will save these Americans up to thousands of dollars by ensuring they have the same access to lower cost, lower-fee retirement options as private sector employees. I am glad to introduce this legislation today to provide a path to a strong, secure retirement for these public servants.”
“This legislation would enable teachers and other public sector employees to access low-cost retirement investments. Financial inclusion and security are important priorities for me in Congress,” said Congressman Barr. “This bill will help hard-working public servants plan for their futures.”
"COVID-19 has taught us even more that we must honor the service of Pennsylvania's public servants, from firefighters to school teachers – and giving them access to affordable retirement savings plans is incredibly vital," Congresswoman Dean said. "This bipartisan legislation will allow these hardworking public servants greater financial security and peace of mind as they work towards a deserved retirement – it’s great to see my colleagues on both sides of the aisle working to remedy this long overdue problem.”
“The National Association of Government Defined Contribution Administrators (“NAGDCA”) is pleased to endorse the Public Service Retirement Fairness Act. This legislation would allow governmental 403(b) plans to invest in the same investment vehicles that private sector 401(k) plans are allowed to invest in. Governmental plans serve the workers who are the backbone of our society: teachers, firefighters, police, and other public servants. This bill would correct the inequitable treatment of governmental employees and allow these public servants to access the innovative solutions and potentially lower costs that CITs offer to their private sector counterparts,” said Josh Luskin, NAGDCA President.
“The Public Service Retirement Fairness Act would significantly benefit millions of Americans who work hard every day to prepare for their retirement,” said Angela Montez, Senior Vice President, General Counsel & Chief Legal Officer ICMA-RC. “ICMA-RC strongly supports your provision that would permit 403(b) plan participants to access lower-cost collective investment funds. We have long utilized collective investment trusts and have found them to be effective in reducing the costs for the public sector retirement savers we support.”
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